House Rent Allowance

CALCULATOR

Some components of your salary can be tax exempt without the need of investing in any tax saving instruments. One of them is House Rent Allowance (commonly referred to as HRA) and to find out the amount of HRA which can be exempt from tax, use our calculator.

TAKE A QUIZ SHOW

House Rent Allowance

ce CALCULATOR

Enter your Annual Basic Salary

₹

Next

Instructions –

Basic salary can be located from your salary statements or Form 16

Do not enter you gross salary or take home salary

Enter your Annual Dearness Allowance (DA)

₹

Next

Instructions –

Dearness allowance can be located from your salary statements or Form 16.

Do not enter the arrears received because of pay commission.

Enter your Annual House Rent Allowance (HRA)

₹

Next

Instructions –

In case you don’t receive HRA as a part of your salary, then talk to your respective HR department.

If you do not receive any HRA, then alternatively you can claim deduction for rent paid under section 80GG of maximum Rs 60000.

Enter your Annual Rent

₹

Next

Instructions –

Enter the amount of rent paid by you to your landlord.

In case the annual rent expenditure exceeds Rs 100000, then you need to submit PAN of your landlord to your employer to avail HRA exemption.

Do you live in a Metro City?(Delhi, Chennai, Mumbai, Kolkatta)

Yes

No

Next

Instructions –

People living in metro cities often enjoy higher exemption from HRA.

The amount of exemption may vary depending upon the city in which you reside.

RESULT

Out of the total HRA received,Rs() is exempted from tax and Rs <> will be taxable as your salaryRs()> will be taxable as your salary income.

For most employees, House Rent Allowance (HRA) is a component of their salary structure. Although it is a part of your salary, HRA, unlike basic salary, is not fully taxable. Subject to certain conditions, a part of HRA is exempted under Section 10 (13A) of the Income-tax Act, 1961.

The amount of HRA exemption is deductible from the total income before arriving at a taxable income. This helps the employee to save tax. But do keep in mind that the HRA received from your employer, is fully taxable if an employee is living in his own house or if he does not pay any rent.

Who can avail HRA? The tax benefit is available only to a salaried individual who has the HRA component as part of his salary structure and is staying in a rented accommodation. Self-employed professionals cannot avail the deduction.

How much is exempted? The exemption for HRA benefit is the minimum of:
i) Actual HRA received
ii) 50% of salary if living in metro cities, or 40% for non-metro cities; and
iii) Excess of rent paid annually over 10% of annual salary

For calculation purpose, the salary considered is 'basic salary'. In case 'Dearness Allowance (DA)' (if it forms a part of retirement benefits) and 'commission received on the basis of sales turnover' is applicable, they too are added to compute the minimum HRA exemption available.

The tax benefit is available to the person only for the period in which the rented house is occupied.

Example of HRA calculation Let's say an individual, with a monthly basic salary of Rs 15,000, receives HRA of Rs 7,000 and pays Rs 8,400 rent for an accommodation in a metro city. The tax rate applicable to the individual is 20 percent of his income.

It shows that of Rs 84,000 actually received as HRA, Rs 82,800 gets tax exemption and only the balance of Rs 1,200 gets added to the employee's income, on which a tax of Rs 240 ( 20 per cent slab ) gets payable.

Documents HRA exemptions can be availed only on submission of rent receipts or the rent agreement with the house owner.

It is mandatory for the employee to report the Pan Card of the 'landlord' to the employer if the rent paid is more than Rs 1,00,000 annually.

Special cases There could be special scenarios in claiming HRA tax benefit, such as:

1. Paying rent to family members The rented premises must not be owned by the person claiming the tax exemption. So if you stay with your parents and pay rent to them then you can claim that for tax deductions as HRA. However, you cannot pay rent to your spouse. As, in the view of the relationship, you are supposed to take the accommodation together. Thus, these transactions can invite the scrutiny from the Income -tax Department.

Even if you are renting the house from your parents, make sure you have documentary evidence as proof that financial transactions regarding your tenancy takes place between you and your parent. So keep a record of banking transactions and rent receipts because your claim can get rejected by the tax department if they are not convinced by the authenticity of the transactions. Recently, there has been an instance in which the HRA claim of a salaried taxpayer was rejected by the Mumbai income tax appellate tribunal because the claim for HRA did not appear genuine to the tax officials.

2. Own a house, but staying in a different city One can avail the simultaneous benefit of deduction available for the home loan against 'interest paid' and 'principal repayment' and HRA in case your own home is rented out or you work in another city.

Individuals who don't get HRA but pay rent There may be some employees who might not have HRA component in their salary structure. Also, a non-salaried individual might be paying rent. For them, Section 80 (GG) of the Income-tax Act offers help.

An individual paying rent for a furnished/unfurnished accommodation can claim the deduction for the rent paid under Section 80 (GG) of the I-T Act, provided he is not paid HRA as a part of his salary by furnishing Form 10B.

How much The least of the following is available for exemption from tax under Section 80GG:
(i) Rent paid in excess of 10% of total income
(ii) 25% of the total of the total income*
(iii) Rs 5,000 per month

*Under this section, the total income is calculated as gross total income minus long-term capital gains, the short-term capital where Securities Transaction Tax (STT) has been paid and deductions available under Sections 80C to 80U, except Section 80GG.

Conditions While claiming a tax deduction, one must remember that the individual himself or his/her spouse, or minor child, or as a member of the Hindu Undivided Family (HUF) must not own any accommodation. Also, if the individual owns any residential property at any place and earns rent from it then no deduction is allowed.

One can avail the simultaneous benefit of deduction available for the home loan against 'interest paid' and 'principal repayment' and HRA in case your own home is rented out or you work in another city. However, the same is not available in case of Section 80GG.